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Free Minds & Free Markets

When Buying Life Insurance Was Deemed Immoral

Your Money or Your Life

The product was perfectly legal. Many prominent clergymen endorsed it, including celebrity preacher Henry Ward Beecher, brother of Uncle Tom's Cabin author Harriet Beecher Stowe. The Pennsylvania House declared in 1811 that it "would be highly beneficial to many descriptions of citizens throughout the state." The need was clear, and the businesses that sold it were untainted by scandal, bankruptcy, or fraud. They delivered what they promised.

But in the early 19th century, Americans just wouldn't buy life insurance.

The problem wasn't mere procrastination. Many people deemed the very idea immoral. "Has a man the right to make the continuance of his life the basis of a bargain? Is it not turning a very solemn thing into a mere commercial transaction?" wrote a typical critic. Religious traditionalists believed they should trust in God's providence, not a financial contract, to care for their loved ones after death. Others, pointing to arson to collect fire insurance, worried that it might encourage murder.

Paternalists—and competitors—warned that beneficiaries wouldn't know how to manage a sudden windfall. The New York Times opined that life insurance eroded the work ethic and discouraged steady savings. It was, the paper editorialized, "calculated to encourage reliance upon something besides economy and industry and to lead accordingly to the relaxation and decay of those cardinal virtues of society." Taking a similar line, the president of a savings bank voiced concern that the "anodyne of security" defied God's plan, in which fear of poverty, which he called the "pressure of wants," encouraged thrift and hard work. (The right kind of thrift, of course, included a savings bank account.)

Then there were the women. Life insurance was supposed to protect widows from destitution if their husbands died, but wives were among its biggest opponents. "It is almost incredible that one of the obstacles to the universal practice of life insurance is found in the opposition of wives and mothers," complained a pro-insurance writer. Wives were often afraid that placing a bet on death would tempt fate. Many viewed a life insurance payout as untouchable "blood money."

Then something changed.

"Not until the 1840s did life insurance begin selling in any significant degree. Then, suddenly, in the span of a few years, its rate of growth became astonishingly high," writes the economic sociologist Viviana Zelizer in her landmark 1979 study of the shift, Morals and Markets, now out in a new edition. "In 1840 there were 15 life insurance companies in the United States and the estimated amount of total insurance in force was under $5 million," she notes. "By 1860, there were 43 companies and almost $205 million of insurance in force."

One reason was undoubtedly economic. As Americans left the countryside to work for wages in growing industrial cities, life insurance became more valuable. A farmer who died left his wife and children a means to earn a living, carrying on as before. The widows and orphans of urban wage earners, by contrast, had no way to replace the lost income.

Urban life tended to be more dangerous, with poorer nutrition and a greater chance of disease. In the years since Zelizer first published her book, careful research by the late Nobel laureate Robert Fogel and other economists has demonstrated that life expectancies for those who survived childhood were falling after about 1840, as were adult heights, an indicator of health and nutrition.

"Although the technological progress, industrialization, and urbanization of the nineteenth century laid the basis for a remarkable advance in health and nutritional status during the first half of the twentieth century," wrote Fogel, "their effects on the conditions of life of the lower classes were mixed at least until the 1870s or 1880s. In the U.S. the negative effects probably exceeded the positive ones through the 1870s."

Yet the economic benefits of life insurance weren't enough in themselves to overcome cultural resistance. Zelizer's research attacks the false dichotomy she calls "hostile worlds," in which economic activity and social relations are seen as opposites: "a world of rationality, efficiency, and impersonality, on one side; a world of self-expression, cultural richness, and intimacy on the other—with contact between the two worlds inevitably corrupting both of them." Rather, she argues, the two are inevitably intertwined. The economy itself is social. The story of life insurance illustrates how emotion, persuasion, and social attitudes shape consumer behavior.

Beginning in the 1830s, life insurance companies largely abandoned arguments about finances in favor of a rhetoric of piety, sentiment, altruism, and paternal responsibility. Both to themselves and to potential clients, they portrayed life insurance as an almost religious institution. "It can alleviate pangs of the bereaved, cheer the heart of the widow and dry the orphans' tears," went a typical pitch. "Yes, it will shed the halo of glory around the memory of him who has been gathered to the bosom of his Father and God."

To further their charitable image, many insurers constituted themselves as mutual corporations, owned by policy holders, the better to seem "free from all selfish principles." (Zelizer points out that founders and executives nonetheless profited from ample salaries.) Most important, they hired aggressive, in-person sales agents to get their message across to the people. "The distinctive role of the agent in life insurance was not simply an ingenious marketing device of the industry," writes Zelizer, "but a response to powerful client resistance."

Insurers countered moralistic opponents with moralism of their own. Unlike already widespread property insurance, they declared, their product represented the "pure, ripe fruit of absolute unselfishness," because the payer himself didn't receive the benefits. And they played the guilt card. Men who refused to buy insurance were demonstrating "their intense selfishness while living, as to leave helpless widows and destitute children to face alone the miseries of starvation."

Gradually, the persuasion worked. Life insurance ceased to be a topic for editorial pages and became instead a common ingredient in family budgets and popular culture. The insurance agent became a touchstone of American culture, from the reassuring Jim Anderson of Father Knows Best to the pesky Ned Ryerson in Groundhog Day. While many a murder mystery turns on an insurance scheme (though contrary to what you might remember, Double Indemnity isn't about life insurance), other works such as Raisin in the Sun use insurance proceeds to create hope for a new life. One of the earliest examples is Willa Cather's 1915 novel Song of the Lark, set in the 1890s. It highlights the interaction of life insurance, benevolent intentions, and dangerous new industries.

"The only men who are incurably nervous about railway travel are the railroad operatives. A railroad man never forgets that the next run may be his turn," Cather writes. Thea Kronborg, the novel's gifted protagonist, is able to escape her small town to study music in Chicago because one such railroad worker, long smitten with her, makes her the beneficiary of his $600 life insurance policy.

By the 1890s, such policies were normal; the posthumous gift marks Ray Kennedy not as a decadent gambler but as a good and discerning man.

Photo Credit: The Mutual Life Insurance Co of New York A (1948)

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  • ||

    Okay, where is the rest?

    This reads like the blurb of a book and does not fit the headline.

    Not Good Reason!!

  • Chipper Morning, Now #1||

    It's like we are back in the 90s.

  • Hank Phillips||

    The title could as well have been: "When Individualism was the Standard of Moral Worth."

  • ThomasD||

    It is still light years better than Tuccile's "Camping Anecdotes and Comments Recorded Over A Few Beers" from a couple days ago.

  • CE||

    Or "How to Trespass and Get Away with It"

  • Dan S.||

    My neighbor still throws away offers for life insurance on the grounds that it would be tempting fate. Of course, no one is dependent on her in the first place, so she really has no reason to buy it. Muslims still believe that they should "trust in God's providence [that is, the will of Allah], not a financial contract", and are ridiculed for it in the West, but not so long ago that belief prevailed here too.

  • CE||

    What about term life insurance? It's a way better deal, but the value goes to zero if you actually live as long as you want to.

  • Eman||

    I don't find it immoral, but it is kind of weird that you're essentially betting against your own health. Is that not the definition of a perverse incentive?

  • Ken Shultz||

    "Insurers countered moralistic opponents with moralism of their own. Unlike already widespread property insurance, they declared, their product represented the "pure, ripe fruit of absolute unselfishness," because the payer himself didn't receive the benefits. And they played the guilt card. Men who refused to buy insurance were demonstrating "their intense selfishness while living, as to leave helpless widows and destitute children to face alone the miseries of starvation."

    It's not like they're inventing a holiday to sell Mother's Day cards. Leaving one's wife and children destitute for failing to provide for them after your death really is immoral.

    If and when we ever get rid of social security, we'll probably need to use the same kind of moral argument. Before social security, taking care of one's elderly parents was thought to be a moral obligation like taking care of one's children--perhaps even more so since your parents took care of you when you were too young to take care of yourself.

    Making care of the elderly the government's responsibility through social security and medicare (for nursing homes) changed all that. Traveling off the beaten path in Mexico and Central America, when I started getting to know the locals, they'd invariably ask two questions about Americans: 1) Is it true we sleep with our dogs? and 2) Is it true we send our grandparents away to be cared for by strangers?

  • ||

    Yeah, he was a 200 lbs sweet mastiff. And my daughter too. Best dog ever.

  • Ken Shultz||

    It was a view of Americans that had been filtered through people whose families are in the United States working as house cleaners and taking care of the elderly. For many of the locals, dogs don't belong even inside the house, and most of the dogs they know are street dogs. Because they don't have animal control like we do, dogs just run in packs in the streets. The dogs are really smart, though; for instance, even in the city, they learn to obey crosswalk signals. Anyway, point was, dogs are nasty, running water is expensive, and they don't think of us washing our dogs as often was we do. In their minds, you're curling up with a mangy street dog, which is disgusting.

  • Ken Shultz||

    In regards to the elderly, it's just completely opposite to their whole social orientation about family. In some ways it's a Catholic perspective of Protestant society. In Catholic society, you might never work for someone you're not related to; in Protestant society, that's called "nepotism", and it's frowned on. Family is everything to them, and, like I said, you wouldn't send your elderly grandparents away to live with strangers anymore than you'd do that to your own children. The reports they get through people who live in the U.S. is that you rarely see any elderly in public anywhere--it's like they don't even exist. From their view, a society excludes the elderly from family life is a morally vacant society.

    There's something to the suggestion that many of our elderly don't want to be a burden to their children, but pointing that out just reaffirms their assumptions. Why would elderly people fear being a burden on family? There must be something terribly wrong with that society.

    Can't say I disagree with them, and I point to social security and Medicare as the likely culprits. If they them in Mexico, after a few generations, more Mexicans would come to imagine that taking care of the elderly was the government's responsibility, too.

  • Longtobefree||

    The government will begin to take care of the elderly in Mexico soon enough; everyone else will have climbed the wall.

  • notJoe||

    Ken,

    An excellent analysis. I'll be passing your thoughts along to my wife, who long has bemoaned the absence of an older generation's influence in our kids' lives.

    Your thoughts re: Social Security and Medicare are probably spot-on. Maybe both programs going bust will have some unlooked-for positive aspects.

  • Paloma||

    Another problem with elder care is that in the US, families have fewer children, so the caregiving responsibilities go to one or two kids for two people. And the elderly are living a lot longer now so the caregiving can stretch into thirty years or so, until the caregiver offspring need care themselves. In most Latin countries, six kids can split the difference of having mom live with them for five or ten years, where she can cook and help clean for the family and babysit the kids and grandkids. But she's usually not getting hours of different therapies everyday and various operations and treatments that extend her life another fifteen or twenty years.

  • ThomasD||

    "But she's usually not getting hours of different therapies everyday and various operations and treatments that extend her life another fifteen or twenty years."

    Here in the US long term care industry they get all that, but none of the stuff those lowly third world people get - love, affection, family, sense of belonging, sense of purpose, etc.

    Instead here they get antidepressants and antipsychotics.

  • CE||

    Social Security is a big reason many elderly people are poor, because they had to pay into it to support other old people all the time they were working. Especially self-employed people who had to pay double.

  • CE||

    If children were allowed to work, would they really need life insurance though?

  • CE||

    Just kidding of course.

  • Jerryskids||

    The New York Times opined that life insurance eroded the work ethic and discouraged steady savings. It was, the paper editorialized, "calculated to encourage reliance upon something besides economy and industry and to lead accordingly to the relaxation and decay of those cardinal virtues of society."

    So even then, the NYT were moral scolds decrying individuals taking responsibility for themselves rather than thinking of the good of society and relying on a higher power.

  • Red Rocks Baiting n Inciting||

    Except nowadays, the "higher power" they want people to rely on is the ever-expanding Bureaucratic/Surveillance State instead of a divine being.

  • SQRLSY One||

    Amen! Let us all now praise Government Almighty!
    Scienfoology Song… GAWD = Government Almighty's Wrath Delivers

    Government loves me, This I know,
    For the Government tells me so,
    Little ones to GAWD belong,
    We are weak, but GAWD is strong!
    Yes, Guv-Mint loves me!
    Yes, Guv-Mint loves me!
    Yes, Guv-Mint loves me!
    My Nannies tell me so!

    GAWD does love me, yes indeed,
    Keeps me safe, and gives me feed,
    Shelters me from bad drugs and weed,
    And gives me all that I might need!
    Yes, Guv-Mint loves me!
    Yes, Guv-Mint loves me!
    Yes, Guv-Mint loves me!
    My Nannies tell me so!

    DEA, CIA, KGB,
    Our protectors, they will be,
    FBI, TSA, and FDA,
    With us, astride us, in every way!
    Yes, Guv-Mint loves me!
    Yes, Guv-Mint loves me!
    Yes, Guv-Mint loves me!
    My Nannies tell me so!

  • CE||

    Yeah, why should the rich second wives of rich guys get 3 million bucks when they die, when we could all get 6 thousand dollar Social Security death benefits instead?

  • AlmightyJB||

    I find the line decrying "reliance upon something besides economy and industry" coming from the NYT to be hilarious.

  • ||

    seems a little unfair of the insurance companies to not let widows and orphans get coverage for their deceased loved one.

    /obama

  • Jerryskids||

    To be fair, being dead is a post-existing condition.

  • Chipper Morning, Now #1||

    Not always!

  • IHeartDagney||

    Yeah! How many "dead" voted in the November election?

  • SQRLSY One||

    Effectively allowing already-dead people get to coverage (comparatively punishing those who were responsible enough to buy life insurance ahead of time) has already been done by Government Almighty. Recall 9-11 in NYC? Filthy-rich investment bankers died; their families sometimes got a million $ or more... While USA dead troop's families were getting $10 K or so... But I digress.
    Families of dead rich folks had the insurance bennies "backed out" by USA FED-guv, for FED-guv bennies... Those who had NOT bothered with life insurance, got the whole kitty from FED-GUV! Lesson: Do NOT be responsible; responsible behavior collects no relative reward, when FED-GUV gets involved!

  • Eman||

    Its both! I think Schopenhauer has an aphorism I like (but can't find ATM) about existence being an infinitesimal interruption of an eternity of nonexistence, but written much better (even in translation), which I find kind of comforting.

  • Hank Phillips||

    Another thing happened that affected the economy. President Jackson had estimated foreign investment in These States at 200 million tinkling gold dollars. But the Chinese government by 1837 had tired of China being a dumping-ground for addictive stupefacients from British India, Burma, and Macau and told opium merchants to pack and depart. There was a huge sucking sound as Great Britain withdrew capital from American securities markets and girded for Opium War with a larger and older civilization on the other side of the planet. Ohio politician John Sherman documented the sudden depression here, and Benjamin Disraeli elsewhere wrote of England's Hungry Forties. Turning a blind eye to a huge market in that peculiar class of drug--whose effects literally amount to a sort of duress--doesn't further our understanding of political economy.

  • Bubba Jones||

    The transition from farm to factory as described seems the best explanation for the rise in insurance. You can't leave your job to your wife.

    A challenge with caring for that elderly is that we now have much smaller families. If you want your family to care for you in your old age, you need more children.

  • Vernon Depner||

    Another factor is that caring for the elderly is usually a much longer commitment than it used to be. In the days when most people never made it to old age, and those who did make it died soon after sickening enough to not be able to care for themselves, taking care of an elder was something not everyone ever faced, and if they did, it was likely to be short term. Nowadays, someone can be elderly and helpless for decades with the help of modern medicine and hygiene.

  • ThomasD||

    Nowadays, someone can be elderly and helpless for decades with the help of modern medicine and hygiene their own personal Global Initiative.

  • Eric L||

    "Religious traditionalists believed they should trust in God's providence,…" I have never understood this line of reasoning. If God gave humans the gift of a mind and free will and the ability to use them (for good or bad) then would it not be possible that the concept of life insurance is a part of God's plan. Many of those same people have probably said at some point "God moves in mysterious ways." Well, maybe life insurance is one of those mysterious ways. Do they rely on God's providence to provide them a house?

  • Arcxjo||

    Another benefit of insurance in the fin de siecle period was that a lot of the insurance companies were styled as fraternal lodges, giving guys a place to drink and get away from the wives their benefits were providing for.

  • Chipper Morning, Now #1||

    So what you are saying is that we are getting ripped off? Where is my booze and lodge?

  • Longtobefree||

    Behind a wall and locked gate so you don't bother the rich country club liberals as they plot your demise via excessive taxation.

  • fdog50||

    I have always thought that it is not a good idea to create a situation in which it is in someone else's interest that I be dead.

  • Hank Phillips||

    Bad news. Every law--even the ones that are good, necessary and rights-protecting--is an offer to kill as many miscreants as necessary to make it stick, just as in Lysander Spooner's day. As with currency, collectivized rights and altruist ethics, if the foundation is no good to begin with, the thing inflates until its worthlessness can no longer be disguised. Baseless currency, fake (positive) rights and a mystical code of ethics that makes death the value to be pursued are the source of most of today's problems. What surprises me are the disclaimers of liability for, f'rinstance, exploding Mohammedan sacrificers. I doubt any heirs or assigns of the victims in this latest English splatterfest will get so much as a farthing because of clever disclaimers of liability for "terrorism" or "Acts of God."

  • ThomasD||

    I wonder if, here in the US, such a bomber could get a payout as a suicide.

    Since it's not possible to be your own victim, terror or otherwise.

  • Art Gecko||

    Like my wife really needs another reason to kill me.

  • CE||

    Others, pointing to arson to collect fire insurance, worried that it might encourage murder.

    Seems like they might have had a point.

  • screen233||

    So we can have instagram hack and it would get the password whenever we should look for the password.

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